- Project plans
- Project activities
- Legislation and standards
- Industry context
- Specialist wikis
Last edited 21 May 2021
Due diligence when selecting contractors or subcontractors
Reliance on credit checks involving accounts filed at Companies House can be useful, as can assessments of past track record, but they have their limitations. It is important to understand where the organisation might be exposed to risks through commitments to, or reliance on, third parties, and how secure and well resourced they are given the size of the proposed contract and their other commitments.
The following issues should be evaluated against the proposed scope of works to be undertaken:
 Current position
- Main customers (each expressed as a percentage of total turnover to reveal where there may be significant dependencies).
- Current contracts in progress including project programmes and values (to assess where there may be significant overlaps that would put the organisation under pressure).
- Staff resources and CV’S of senior management.
- Organisation chart.
- Current debt position with debt expiry dates.
- Current direct labour resource, including comparisons with previous years.
- Current subcontractors and suppliers.
- Details of current warrantees, guarantees, encumbrances, liens, performance or on-demand bonds or charges held by third parties.
 Future position
- Pipeline work under tender or negotiation.
- Current unaudited annual accounts in progress.
- Proposed subcontractors and suppliers.
 Legal position
- Litigation, claims and other disputes in progress.
- Ownership of intellectual property, patents, licenses and certification required to carry out the work.
- Insurances in place.
- Partnerships or joint ventures with other organisations.
- Ownership of machinery and facilities required to execute the work.
 Technical capability
- Examination of past or current similar work.
- Competency, qualifications and certificates.
- Subcontractor and supplier capability.
- Building Information Modelling (BIM) capability.
- Overall capacity to undertake the work.
- Disaster planning in the event of a catastrophic occurrence such as fire.
 Other indicators
- The cost of performance bonds.
- Reputation in the insurance market.
- Time taken to pay subcontractors and suppliers.
 Step-by-step guidance on appointing a contractor:
- Traditional contract: tender.
- Design and build: tender.
- Construction management: tender.
- Management contract: tender.
- Public project: tender.
 Related articles on Designing Buildings Wiki
Featured articles and news
EV power sources: first you see them, then you don't!
Organisation addresses fire safety culture change and competence.
Using mathematics and psychology to make unbiased, complex decisions.
High levels of mica and pyrite found in aggregate used for Irish homes.
Organisation offers mobile app to its members.
BSRIA explores US share of 2020 VRF market.
New fire safety requirement comes into force.
Different types of bridges are meant to move.
A logical approach to handling the internal voice of self doubt.
First fashionable in the US, decorative metal has become globally desirable.
Helping communities preserve and enhance historic environments.
Creating comfortable climates despite extreme temperatures.